Straightarm Inc. is a calendar-year corporation. Its financial statements for theyears ended 12/31/24 and 12/31/25 contained the following errors:Ending inventoryDepreciation expense.Select one:2024• Failed to record Unearned Revenue at 12/31/25: $7,000Straightarm declared a cash dividend of $11,000 on 12/31/25. No journalentry was made in 2025. The dividend was paid on 1/3/26; Straightarmdebited Retained Earnings and credited Cash.12/31/26 Retained Earnings is in error by:ha. No error$15,000 understatement6,000 understatementOb. $18,000OC. $12,0002025$24,000 overstatement12,000 understatement1O+8

The errors which are done by the company over the temporary accounts like over or under recording of…

Answered: 12/31/26 Retained Earnings is in error…

Business

Accounting

12/31/26 Retained Earnings is in error by:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: am.402.

A: The objective of the question is to understand the impact of understating ending inventory on the…

Q: A change in accounting estimate is accounted for by Prospective application Retrospective…

A: A change in accounting estimate refers to an adjustment made to an asset or liability on the books…

Q: 49. Which of the following will result if the current year's ending inventory amount is understated?…

A: Ending inventory is credited to income statement.

Q: If the inventory reported on the statement of financial position is understated, then the net income…

A: The objective of the question is to understand the relationship between the inventory reported on…

Q: Under IFRS 8, which of the following is not a criterion used to determine reportable segments? a.…

A: As per IFRS/IAS an operating segment is an component of organization.

Q: Which of the following statements is true? Multiple Choice

A: The following statement is true.

Q: 17. Which statement is incorrect regarding presentation of basic and diluted EPS? a. Earnings per…

A: There are two types of EPS 1. diluted EPS 2. Basic EPS

Q: Inventory at the end of the year was inadvertently overstated. Which of the following statements…

A: The movement in the balance of inventory at the start and end of a period is as a result of sales…

Q: Which of the following is NOT an efficiency ratio us financial statement review? OOC Operating…

A: Efficiency ratio how much is the firm efficient and more efficiency mean more profit and more growth…

Q: The credit balance that arises when a net loss on a purchase commitment is reconginzed should be..…

A: Balance Sheet :—This statement shows assets owned by company, liabilities of the company, and…

Q: What is the difference between a revenue and a gain? O a. Revenue results from internal…

A: Analysis: Revenue: Revenue means total income generated by the company from the sale of goods or…

Q: Lower of cost or market is an attribute used for the: a. initial measurement of accounts…

A: Lets understand the basicsas per IAS 2 "Inventory" inventory should initially be recorded at cost.…

Q: None

A: Trading AccountTo determine the Gross Profit:Sales: $150,000Less: Returns Inward: $0 (not provided…

Q: What impact may the low accuracy of accounting estimates have on the annual statements?

A: Accounting estimates means estimation of the accounting transactions based on different factors like…

Q: 54. To calculate a beginning or ending inventory ($ amount): The appropriate Inventory quantity x…

A: Truethe formula provided is correct for calculating the value of inventory. Multiply the quantity of…

Q: Which of the following ratios does not use net income in its calculation? Multiple Choice…

A: (i) Net profit margin:The formula for net profit margin is:Thus, 'Net profit margin' is an incorrect…

Q: Provide some examples of items that would be adjusted directly against equity, rather than…

A: There are certain items that are directly adjusted to equity rather than recognized in the profit…

Q: Corrections of significant errors of past periods are charged or credited directly to the Retained…

A: Retained earnings comes under the head liabilities in the balance sheet .

Question

Straightarm Inc. is a calendar-year corporation. Its financial statements for the
years ended 12/31/24 and 12/31/25 contained the following errors:
Ending inventory
Depreciation expense
.
Select one:
2024
• Failed to record Unearned Revenue at 12/31/25: $7,000
Straightarm declared a cash dividend of $11,000 on 12/31/25. No journal
entry was made in 2025. The dividend was paid on 1/3/26; Straightarm
debited Retained Earnings and credited Cash.
12/31/26 Retained Earnings is in error by:
h
a. No error
$15,000 understatement
6,000 understatement
Ob. $18,000
OC. $12,000
2025
$24,000 overstatement
12,000 understatement
1
O
+
8

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Computation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The following are several figures reported for Poyer and Sutter as of December 31, 2024: Sutter $ 280,000 760,000 Items Inventory Sales Investment income Cost of goods sold Operating expenses Poyer $ 480,000 960,000 480,000 220,000 380,000 290,000 Poyer acquired 90 percent of Sutter in January 2023. In allocating the newly acquired subsidiary's fair value at the acquisition date, Poyer noted that Sutter had developed a unpatented technology worth $74,000 that was unrecorded on its accounting records and had a five-year remaining life. Any-temaining excess fair value over Sutter's book value was attributed to an indefinite-lived trademark. During 2024, Sutter sells inventory costing $128,000 to Poyer for $176,000. Of this amount, 15 percent remains unsold in Poyer's warehouse at year-end. Required: Determine balances for the following items that would appear on Poyer's consolidated financial statements for 2024: Note: Input all amounts as positive values.
Which of the following items in the balance sheet does NOT have a constant relationship with sales in general when we use the percent of sale method to construct pro forma financial statements? Retained earnings Inventory Accounts receivables Accounts payables
Hh1.
Answer only. Answer full question
F43.
Exercise 17-4 (Algo) Computing and interpreting common-size percents LO P2 Express the following comparative income statements in common-size percents. Using the common-size percents, which item is most responsible for the decline in net income? Complete this question by entering your answers in the tabs below. Income Statement Reason for Decline in Net Income Express the following comparative income statements in common-size percents. (Round your percentage answers to 1 decimal place.) Sales Cost of goods sold Gross profit Operating expenses Net income GOMEZ CORPORATION Comparative Income Statements For Years Ended December 31 Current Year $ Current Year % 780,000 $ 560,000 220,000 130,400 89,600 $ Income Statement Prior Year $ $ $ 660,000 295,400 364,600 251,600 113,000 Prior Year % Reason for Decline in Net Income >
________ has no effect on retained earnings.